Bitrabo Editorial
Recent blockchain analysis suggests that Bitcoin may be entering two significant phases in its market cycle, which could influence the price direction of the cryptocurrency in the upcoming weeks.
Identification of Bitcoin’s Accumulation and Distribution Phases
Data from Bitcoin’s blockchain highlights areas of Accumulation and Distribution, shedding light on investor activities, as noted by Alphractal, a sophisticated investment data platform, in a recent X (formerly Twitter) update.
During accumulation phases, large investors, often referred to as whales, and long-term holders typically increase their Bitcoin holdings, indicating faith in the asset’s potential price rise. In contrast, distribution phases see these holders sell parts of their assets, often resulting in market corrections and increased volatility.
This analysis was conducted using Bitcoin’s On-chain CapFlow Sentiment Index, a metric that evaluates the realized value of BTC using various momentum indicators and on-chain oscillators.
The platform indicates that this metric effectively identifies points where the momentum of coin flow diminishes, reflecting distribution by knowledgeable market players. This trend can also occur during accumulation, marking potential local bottoms.
Moreover, after a distribution period in 2024, Bitcoin has not yet hit new all-time highs. However, it could potentially repeat the three-phase cycle seen in 2017.
Consequently, Alphractal emphasizes the need to monitor this metric closely to determine if new demand is emerging; a decline could foreshadow a drop in BTC’s price.
Is Bitcoin Regaining Its Momentum?
Recent positive trends in Bitcoin’s on-chain metrics suggest a possibility for a resurgence in its price momentum, similar to last week’s surge from around $59,000 to nearly $70,000.
BTC reached approximately $68,693 late Thursday, but has since fallen below $67,500. Despite some concerns, Bitcoin seems resilient, maintaining a strong support level around $67,300.
This recent dip may be attributed to a lack of purchasing activity, as trading volume has decreased by over 11% in the last 24 hours. If buyers regain market control, BTC could gather momentum for recovery, with $70,000 being a key target to watch.